Industry Insights

Avoiding readmissions is a critical component of every recent healthcare payment initiative. Current Medicare payment rules penalize hospitals with high readmission rates, the Bundled Payment Initiative requires contracting organizations to include related readmissions in the payment bundle, and ACOs will have incentives to reduce readmissions to create “shared savings”.

In the draft ACO regulations, CMS established a single ACO risk adjustment factor using historical data from all participants, and did not modify it throughout the participation period.  This policy reflected CMS’ concern that risk scores would increase due to changes in coding rather than actual changes in patient status, which would inappropriately lower the benchmarks and allow additional “savings” to be realized.  Therefore, the risk score of the initial group of members would be applied throughout the participation period regardless of changes in the actual